Regulation of non-point source pollution under n-firm Bertrand competition

Abstract

This study demonstrates the conditions under which an increase in the ambient charge positively or negatively affects the total level of non-point source pollutions. For this purpose, an n-firm Bertrand framework is used in which goods are differentiated and the corresponding price functions are linear. It is shown first that the effect is definitely negative in duopoly and triopoly and second that, for n $$> 4$$ , the sign of the effect depends on the number of the firms involved and the degree of substitutability.